There is one fundamental difference between how mobile money is allowed to operate in India compared to country with success history say Africa. In India, mobile money is a semi-closed system A user can cash-in (convert cash into electronic value at an agent) and make transfers, but they cannot directly cash-out (convert electronic value into cash). They can only cash-out by making transfers to their bank account. The restrictions to cash-out and linkage with the banks limits how fast mobile money has grown in India its pace of future growth.
Mobile Money Ecosystem primarily includes Mobile Operator, Bank, Agents, Retailers, Regulators, and Consumers. The Sales Agents & Retail Outlets who perform cash-in and cash-out functions act as the primary interface with customers and serve as the backbone of the Mobile money ecosystem. The restrictions to cash-out and linkage with the banks is going to limit how fast mobile money will grow in India. The following factors can contribute building a strong business service model.
- Building a strong distribution network and Wide coverage of retailers accepting mobile payments.
- Interoperability in terms of network will increase adoption of services
- Gamut of utilities offering mobile payment options
- Practical regulation and intervention
Few business models are prevalent in market of Mobile money deployment:operator-led, bank-led and third party-led .Operator-led model is best suited for Mobile Money services in an emerging country like India leveraging high mobile penetration, massive distribution & the ability to create a viable business from small value transactions to provide primary banking access to un-banked .Operator is the driving force as it provides the mobile infrastructure and distribution channel to carry any type of banking service .The operate should bank on its own strong network or leverage it to banks and financial institutions to offer the solution services. However, regulations in India largely place the onus for Mobile Money on banks.
One advantage for mobile money in India though is the fact that SIM registration is already mandatory. Users must provide personal details and ID before they are issued with a mobile number. This information can be used for mobile money to achieve limited KYC for the base category of services as permitted by RBI, reducing the barrier to experience mobile money.
So while growth is not going to be as explosive in a short period of time compared to some countries, it is still a numbers game in India. The government and regulatory bodies should allow room for innovation and support for licensing banks, Operators and financial institutions.